Shell Close to Signing $10 Billion Shale Gas Deal with Ukraine

One of the final hurdles standing in the way of the $10 billion shale gas deal between Royal Dutch Shell (NYSE: RDS.A) and Ukraine was cleared on Wednesday when local authorities approved the plans for Shell to develop the country’s huge shale reserves under a production sharing agreement.

Ukraine, which has Europe’s third largest shale gas reserves after France and Norway, is keen to develop its giant Yuzivska shale gas field in order to reduce reliance on imported Russian natural gas, which it buys for an exorbitant $430 per thousand cubic metres; US power companies buy natural gas for around $172 per thousand cubic metres.

Oleh Proskuryakov, the Environment and Natural Resources Minister, said that, “if exploration is successful in the Yuzivska area, we will be able to produce a few billion cubic metres (bcm) of gas per year in just five-six years and eight to 10 bcm in 10 years. At its peak, in 13-15 years, annual production may exceed 20 bcm. This will not only strengthen our energy independence but will also significantly reduce gas prices.”

Proskuryakov previously stated that they hope for all hurdles to be overcome and the final agreement signed with Shell during the first quarter of the year.